Posts Tagged ‘Government’

In 2008, the Swiss people had pay out massive sums to save the country’s largest bank from collapse due to the toxic assets it had foolishly amassed in the U.S.

The Government bought most of UBS, so that it was in effect nationalised. The Swiss National Bank granted it a large loan and created a “bad bank” into which the toxic assets were dumped. As a result, the Swiss people took on the sizeable risk that the bank would never recover and all their investment would go down the drain.

Yet in 2010, the Government was able to sell its share in the bank at a modest profit. Now UBS has almost repaid the loan from the National Bank, which moreover has agreed to the bank taking back all the assets dumped in the “bad bank.” These have regained considerable value as a result of the recovery of the U.S. housing market.

Neue Zuercher Zeitung worked out that what the people have earned through the substantial interest charged on the loan and the National Bank’s share of the profits on the resurrected toxic assets will by year-end reach 6.5 billion Swiss francs ($7 billion).

Since 2011, the Swiss National Bank also bought huge amounts of foreign currency to prevent the Swiss franc appreciating too much – it had firmed from 1.55 to the euro in 2008 to 1.05. It set a base of 1.20 and announced it would sell any amount of Swiss francs to prevent further appreciation. After nearly a year bumping along the floor, the currency has eased to 1.23, and so when the National Bank decides to mop up the Swiss francs, it will repurchase them at less than it sold them for.

Together with the profit on re-privatising the bank, this would take the earnings of the people in this affair to around 10 billion francs ($11 billion) or more.

So a bank bailout can be profitable, not just a drain on the people’s wealth for the benefit of reckless banks. Why has it worked out this way for Switzerland, while in other countries such as Spain, Portugal and Greece, bailouts caused investors to lose faith in the solvency of the governments themselves?

In Switzerland, public finances were solid, and so foreign investors never doubted the capability of the state to assume the bailout burden. Secondly, Swiss companies are geared to high-quality and precision goods, which are not particularly price-sensitive. A liberal policy on immigration enabled it to import highly-qualified labour to keep standards high.

Not rocket science, but a focus on prudence and quality which has paid off.

The ruling UMNO-led coalition has again won Malaysia’s “elections,” but after 57 years in power the process has become something of a charade. The government was declared to have won 133 seats and the anti-corruption opposition led by Anwar Ibrahim 89.

Despite its confidence beforehand, it is hard to see how the opposition could have succeeded. The government monopolises the mainstream media, which refused access to the opposition. Rather than an election campaign, there was thus a monolithic advertising campaign on behalf of the government.

The opposition was reduced to using social media and holding rallies. The latter were constantly disrupted by police mounting road-blocks to delay participants or interrupting proceedings on the grounds there was no “permit.” The opposition campaign bus, fitted out with a collapsible stage because halls were denied to them, was repeatedly vandalised. Under such circumstances, it is hard to see how they could have come out on top.

After 57 years in power, the ruling coalition has inevitably become financially corrupt. Its supporters are those who benefit from the sleaze and the ill-educated in the countryside: a coalition of the corrupt and the ignorant. The opposition has its power base among the well-educated in the major urban centres.

The government’s “election” result is nevertheless its worst ever, and Anwar claimed widespread fraud. There are even suggestions the government won less than half the popular vote. But there seems little for the educated and the open-minded to do except continue biting their nails in frustration. Many opposition supporters blacked out their profiles on Facebook after the results were announced.

Anwar, aged 65, and imprisoned for six years on a spurious pretext, was once a rising star of Malaysia, representing his country as Deputy Premier at the Davos World Economic Forum. Before this latest poll he said he would leave politics if he did not win. Malaysia will be the worse off if he does.

I’m appalled at Britain’s veto of a new European Union treaty supported by 26 other states. It’s boorish and selfish. Like Britain, the 26 other members have their national interests to protect. But they chose solidarity at time of crisis, while Britain showed none.

The treaty’s declared purpose is to reinforce fiscal responsibility. Is that really something we should prevent? Protect the City of London? Maybe that’s worthwhile, but possibly also not. Remember 2008.

Doubtless this could also be achieved by normal diplomacy. Instead, Britain offers only the sharp elbows of the cocksure bully.

Having lived on various countries on the continent, I have become used to moving easily among peoples of different nationalities, languages and histories, finding common ground and common values with no great difficulty. In Britain, I regret that emotional xenophobes with fringe-island opinions are to the fore.

I’m proud to be British, but I don’t subscribe to the assumption that only Britons can be right. I’m British, but ashamed of the rude arrogance of those who represent me. I’m British, and very much European too.